EAC has clear road map to create jobs

EAC has clear road map to create jobs

Context:

• The Prime Minister’s Economic Advisory Council has proposed a road map for stepping up skill development, creating jobs, enhancing resource investment in the social sector including for health and education, and for boosting infrastructure financing.

Introduction:

• The Council was headed by NITI Aayog member Bibek Debroy.
• EAC members recently discussed the improvements needed in national accounts and innovative steps for unlocking growth, exports and the employment potential of growth drivers, including through transformation of India’s gold market.

Key highlights of the Council:

• The Council has formulated far-reaching recommendations to guide the evolving framework for the 15th Finance Commission which would recommend the formula for sharing taxes between the Centre and the State and the allocation that each State would receive, for the five-year period between 2020-2025.
• It formulated recommendations to guide the evolving framework for the Fifteenth Finance Commission, including the incentivisation of State for achieving Health, Education and Social Inclusion outcomes.
• The Council did not share any assessment of the present state of the economy, but said it “took stock of the economic and social analysis done by the them groups and ‘evolving initiatives’ led by its different members.
• Innovative steps for unlocking growth, exports and employment potential were also deliberated upon –including through transformation of India’s gold market.
• The council is also evolving the design of a new economy tracking monitor, linking economic growth indicators with social indicators for last-mile connectivity
• The Council stressed on the need for according high priority to infrastructure financing and made a presentation on the issue with a focus on developing new mechanisms for a risk coverage umbrella.

About Finance Commission:

• The Finance Commission was established by the President in 1951 under Article 280 of the Indian Constitution.
• It was formed to define the financial relations between the central government and state governments.
• According to the Constitution, the commission is appointed in  every five years and consists of a chairman and four other members.

Functions of Finance Commission:

• Distribution of net proceeds of taxes between Center and the States, to be divided as per their respective contributions to the taxes.
• Determine factors governing Grants-in Aid to the states and the magnitude of the same.
• To make recommendations to president as to the measures needed to augment the Fund of a State to supplement the resources of the panchayats and municipalities in the state on the basis of the recommendations made by the Finance Commission of the state.
• any other matter related to it by the president in the interest of sound finance
• Finance commission is autonomous body which is governed by the government of India.

Qualifications of the members

• The Chairman of the Finance Commission is selected from people with experience of public affairs. The other four members are selected from people who:
• Are, or have been, or are qualified, as judges of High Court,
• Have knowledge of Government   finances or accounts, or
• Have had experience in administration and financial expertise;
• Have special knowledge of economics  

Disqualification from being a member of the Commission

A member may be disqualified,

• He is mentally unsound;
• He is an undischarged  insolvent
• He has been convicted of an immoral offence;
• His financial and other interests are such that it hinders smooth functioning of the Commission.